New mandatory climate reporting in Australia brings challenges and commercial opportunities for the mining sector
ERM’s Dr Mary Stewart and Victoria Cross are currently supporting companies, from all sectors of the Australian economy, as they prepare to meet the new mandatory climate reporting requirements under the Corporations Act.
In this exclusive article for the AusIMM Bulletin , they outline what’s required under the new requirements – and why the mining sector needs to act now to unlock commercial and strategic advantage.
What is mandatory climate reporting?
Australia is one of the first jurisdictions globally to introduce mandatory climate disclosure by adopting its version of the International Financial Reporting Standards (IFRS) S2 standard. The intent of the Australian Sustainability Reporting Standard (ASRS) is to give investors comparable climate related financial information to support their investment decision-making.
The standard requires most of Australia’s publicly listed and private entities to disclose the climate-related risks and opportunities that could reasonably be expected to affect their cash flows, access to finance or cost of capital over the short, medium or long term (out to 2050). Whether a company is required to report or not is a function of their size – considering revenue, assets and headcount. As these are financial disclosures, they need to be audited. While there is a phase-in period for this audit requirement, ultimately all disclosures must all be assured to a reasonable assurance level. These disclosures are also due on the same timing as financial disclosures, so within three months of the end of the financial year.
Not only do climate risks and opportunities need to be disclosed, but adequate governance must also be in place to oversee and manage them, and businesses need to explain how their business strategy and planning takes these into account on an ongoing basis.
What does this mean for the mining sector?
The Australian mining sector is no stranger to managing climate risk. We’ve seen very recent examples of extreme weather events causing material disruption to the operations of mining assets; in other instances, water stress has caused community unrest and licence to operate challenges. However, the pressure is now on to understand and eventually quantify the financial impacts of these risks over time, for both mining companies and all those in their value chain.
Equally, when it comes to opportunities, the Australian Treasury has made no secret of the fact that it wants Australia to use its natural resources to become an energy transition superpower. But just how much monetary value that will create for the mining sector remains to be fully quantified and explained to investors. We have seen instances where mining operations are starting to match their processing to energy availability (e.g. choosing to mill in the middle of the day when renewable power is plentiful and energy prices are negligible).
In addition, AASB S2 (the Australian iteration of the IFRS standard, now available on the AASB Digital Standards Portal) requires companies to disclose their greenhouse gas emissions data, not just for their own operations (scopes 1 and 2 - which is mandatory in the first year), but also for their suppliers from year two onwards (scope 3). We’re already seeing mining companies (and those supplying into the mining sector) that might not be sizeable enough to trigger AASB S2 disclosure being asked to provide customers with audit-ready climate risk and emissions data. For listed companies, the resulting data will be publicly available and easily comparable over time, driving urgency in emissions reduction and transition planning strategies as it becomes easier to identify critical supply chain risks and opportunities.
How prepared is Australia’s mining sector to meet these new requirements?
At ERM we offered a free readiness assessment for 18 months (up until August 2025). We used this to capture and analyse how ready the sector is to meet mandatory disclosure requirements. The assessment results provided valuable insights into how prepared different sectors of the Australian economy are to tackle this disclosure challenge. Summary results for the entire 300 company dataset are included in Figure 1.
Not surprisingly, the mining sector has some aspects (such as quantifying its own operation’s greenhouse emissions) well covered, and a fairly good understanding of their operational climate related risks. However, on topics such as board level governance of climate, value chain emissions, and explicit linkage of climate into business strategy there is still considerable work to be done. The readiness of the mining sector to disclose is outlined in Table 1.
The mining sector stands to make great gains if they approach these disclosures and the processes that underpin them with a growth mindset. Australia has extraordinary renewable energy potential; coupled with resources that will underpin the global energy transition. Planning ahead and looking for the opportunity will ensure that the mining sector takes a deserved place in this nation building opportunity.
How much is enough?
Even for those organisations with mature climate strategies ensuring a compliant first year disclosure is a fair amount of work, and for those organisations where little or no work has been done, there’s a significant hill to climb. Indeed, the biggest question we’re being asked right now is “how much is enough?”.
The answer comes down to disclosure appetite. We’re urging our clients to start with the end in mind. Convene a cross functional team and align internally on what value they want to get out of the ASRS process. Is it merely about ticking the box with as little effort as possible? Or might this bring new insights the business can act on? (e.g. to realise cost efficiency, open new customer markets or deepen site level resilience).
We’ve seen numerous companies significantly enhancing their enterprise risk approach to consider different time horizons and futures for climate risk and then extending this to other areas (e.g. water). Meanwhile, we’ve taken other clients on deep dives into topics that had long been discussed as commercial risks but are not yet fully quantified (e.g. the future of Australia’s Fuel Tax Credit in an energy transition-conscious economy).
Rarely has the ASRS journey delivered no commercial reward.
Integration into business decision-making
Undoubtedly the biggest challenge faced by all ASRS reporters is being able to meaningfully demonstrate (to the satisfaction of the auditor, and ultimately investors) that climate related risks and opportunities are fully integrated into strategy and business decision making. This can be implicit or explicit, but a clear linkage must be made.
Depending on your role, regardless of whether you’re site based, part of the metallurgy or mining activities, or in head office, it’s likely that gathering this evidence will involve you or your team in some way. This means effectively demonstrating how your business has:
- reduced operating costs through the implementation of energy efficiency activities at your site
- forecasted future capex allocations for asset level mitigation against extreme weather events, or to support long term asset decarbonisation
- integrated climate factors (e.g. future water stress or biodiversity changes) in a range of future scenarios, when planning and permitting a new site
- specified your fleet with an understanding of process efficiency and proposed future fuel sources including electrification
- chosen preferred commodities to focus on to support a future that is powered by renewable energy.
Start now to reap the benefits
Whether the climate conversation currently happens regularly, infrequently, or never in your organisation, now is the time to bring it formally to the table.
Our final piece of advice: get on with it sooner rather than later, so you can reap the commercial rewards of improved business resilience, greater operational efficiency, enhanced oversight of energy transition related commercial opportunities, and ultimately, a more valuable business.
If you have any questions or would like to contact the authors, please reach out to us: AustraliaMarketing@erm.com